Frozen Tax Thresholds and Bailiffs

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Hello, welcome to this Moneybox podcast. We are fully authorised to attend your address. The frightening letter one listener received from a debt collector, about £1,700 owed by a complete stranger. If you bought a car on finance before February 2021, an official investigation into how those deals were sold could mean a big payout for millions of motorists. But first...

In his 65-minute budget speech, Chancellor Jeremy Hunt didn't mention the continuing issue of frozen tax thresholds, which the budget watchdog says would leave taxpayers £23 billion poorer. He did announce that he will cut taxes for people who work by slashing the rate of national insurance. Again, in January, it fell from 12% to 10% and will go down to just 8% from April. He said that will save workers on average pay.

£450, that's £900 altogether compared with a year ago. Analysis by the official budget watchdog, though, says the freeze on the amount of income we can have before tax will mean nearly 4 million extra people will pay... income tax by the time it comes to an end in 2028. And some of those are pensioners who don't benefit from a national insurance cut because even if they work, they don't pay it anyway. Moneybox listener Ruth. Hello, Moneybox.

the budget did not upgrade the personal allowance below which we don't pay tax in line with inflation. For people like me who are on a low income... from two pensions, that just about brings me into a noticeable amount of income tax. It's not going to bankrupt me or make me unable to buy food, but it's noticeable. But I think that the amount of tax... that I have to pay, it should not increase just because the personal allowance is not being increased in line with inflation.

And Dave emailed to say he was now paying tax. Crazy, he put it. Anne had another worry. I thought national insurance went towards paying for pensions. Will the cut lead to a shortfall, she asked. Well, a good question. Not least because in his... pre-election budget, the Chancellor said he wants to go further and scrap national insurance altogether. Because we believe that the double taxation of work is unfair, our long-term ambition is to end this unfairness when it is responsible.

when it can be achieved without increasing borrowing, when it can be delivered without compromising high-quality public services, we will continue to cut national insurance as we have done today so we truly make work pay. But leaving aside that long-term ambition, what do these changes mean for your money?

From April. With me in the studio is Nimesh Shah. He's Chief Executive of the Accountants' Blick Rothenberg. Nimesh Shah, let's take that National Insurance Cut first. The Chancellor said a worker on average pay... which he puts at £35,400 a year, under the age of 66, of course, would save... £450 in tax and £900 if you add in the cut that began in January. Though the Treasury told me last night overall the average gain from both is actually £682. So it does depend on your income.

mean for people on different wage levels yeah that's right paul and the national insurance cut the two percent national insurance cut from April this year will actually probably benefit, well, no, it will benefit higher earners disproportionately more than lower earners. So doing a little bit of maths, someone earning £20,000 will be only...

£260 better off as they are from this current tax year, but someone earning £50,000, they'll be £1,300 better off than this current tax year, 23, 24. Yeah, so that's because they pay more national insurance, so if you cut it by 4%. They save more. Those are employees, but there was also a cut for self-employment. Self-employed people, wasn't there? 2% off their tax, taking it down to 6% in that case. Yeah, that's right. The self-employed weren't left behind this time. So there's a 1% cut.

back in the autumn statement. That was due to take effect from April. Now Jeremy Hunt has gone one step further and said there'll be another 2% cut for self-employed people for Class 4 national insurance. That takes the rate to 6%. Also, let's not forget Class 2 national insurance was effectively abolished.

for the self-employed back in the autumn statement as well. Yes, and that was a flat rate tax, but it is valuable to cut for self-employed people. I think in the red book, the official book, it says the average self-employed person who earns rather less, £28,000, will save around... £650 a year though again the average.

probably be a lot less so those are the gains and that's all the good news or some of the good news but there's a loss isn't there because the amount of income you can have tax-free remains frozen and that will be frozen until 2028 so as your income rises you pay more tax. The Office for Budget Responsibility said 3.7 million more people will end up paying income tax at all than if it had risen with inflation. It would have been 15,000-odd then.

What's the tipping point? What do you have to earn for the tax cut to be outweighed by the threshold remaining frozen? So it's just around £23,000, £24,000 to break even. And again, it's just illustrating that frozen allowances are having a disproportionate... adverse effect to lower earners so someone on £20,000 had the personal allowance just increased with the OBR figure on inflation which would have made it about £15,000

they would be better off by £115 versus what the Chancellor has done over the last two statements. Yes, in fact, we've had emails about this already, Christine's email, to say generally about the Chancellor and the budget. It's a swizz. And you can see why, in a sense, can't you? Now, we had a lot of people...

getting in touch about pensions, their tax on their pensions. The Department for Work and Pensions told me in a Freedom of Information request that more than 1.5 million people now have a state pension above the tax threshold. And that'll get worse from April, presumably, because pensions... are going up and thresholds being frozen well increasing the state pension is good news

The bad news, as some of the listeners have called in to say, is that they are now tipped into income tax because the personal allowance has not kept up with the rise in the state pension. However, worth remembering, pensioners do not pay national insurance. Basic rate of income tax is a flat 20%. Someone on the same amount of earnings will be paying...

From April, 28%. Now, we've been talking about frozen thresholds, but let's just briefly mention the one that did increase, the means test threshold for child benefit. Briefly, what happened there? Great news. It was £50,000. It's gone up to £60,000 and the rate at which it tapers away has doubled. So the effective rate of tax for a family with two children, it was over 60% for someone earning between around...

50,000 and 60,000. Now for someone earning between 60 and 80, that effective rate of tax is dropping to 53%. So good news and a great move by the Chancellor there. Yes, it'll help 485,000. better off parents by about 1260 a year they say. Thanks. Now, if you do have young children, how prepared are preschools and nurseries to meet the Chancellor's Autumn Pledge of 15 hours free childcare in term time for working parents of nine-month-olds? Phase one for two-year-olds begins next...

Can they cope? That's the topic for Moneybox Live with Felicity Hanna on Wednesday. Send us your questions and experiences to moneybox at bbc.co.uk and leave a phone number if you can.

We are fully authorised to attend at your address. Just one part of a letter that alarmed one Moneybox listener when it dropped through his door in January. It was from a debt collector chasing nearly £2,000 owed by a complete stranger. Phil Gamble contacted me. after he spent weeks trying to sort it out himself. Our reporter, Dan Whitworth, went to Not End on Sea in Lancashire to meet him and Phil read out some of this alarming letter.

The warrant gives us, the enforcement company appointed by our client, the authority to enforce the warrant in accordance with the Tribunal Court and Enforcement Act. We are therefore fully authorised to attend at your address. and our actions in doing so cannot be construed as trespass or harassment as you claim in your letter.

You need to make contact with the enforcement agent as a matter of urgency so that this matter can be settled and show them evidence to confirm what you have told us. How would you describe that letter, Phil? I think the letter sounds very threatening, to be honest. When they say that they're fully authorised to attend our address and our actions are not trespass or harassment, to me that...

Puts a bit of fear into me, you know, and I'm waiting for the knock at the door, people to come barging in. It got to the stage where I couldn't sleep. Because I was thinking, is it tomorrow morning when they're going to be sort of knocking on the door? You see on the television that it's sort of like 5.30 in the morning that they're banging on the door just to make sure that you're in. And then I was trying to think about the logic of...

How can I prove that that television's mine? How can I prove that I own the settee? How can I prove that the food mixer in the kitchen is mine? Like most people, you buy it. get rid of the receipt and you know it's just an item in the house. Phil says it took about five weeks and around a dozen emails, letters, phone calls and text messages before the enforcement agency finally accepted the man they were chasing didn't live at Phil's address.

There are still so many unanswered questions to this. The big one, presumably, is who the heck is this person who was down at your address, who owes £1,700, that's registered at your address? Yeah. The worry about that is... Are they still doing it? Is somebody else still doing it? And how easy is it to do it? For all I know, he could still be using it. We've moved house recently, and I'm worried now for the people that have moved in.

In case suddenly they start getting knocks at the door and then they start thinking that we've left them with debt and we've left them with problems and start chasing us again, you know. So the worry hasn't gone away. We're made to doubt ourselves. We're the ones with these letters and emails sort of saying, we think it's you. You prove that it's not you. And so you prove that you're innocent. Phil Gamble and Dan's here now. Dan, what more do you know about Phil's case?

Well, Marston Recovery is the name of the enforcement agency which was chasing this £1,700 debt at Phil's address. It told us it complies with all government regulations and the industry's code of practice, but that after reviewing this case, it accepts... It, quote, could have done better in some areas and are taking steps to ensure this doesn't happen again. The companies also apologised directly to Phil. And how common is this type of mistake? We don't know.

We do know, though, that bailiffs are instructed to recover debt in around four million cases in 2022. Most of that for things like parking charge notices and council tax. Now, nearly all bailiffs are now subject to something called the Enforcement Conduct Board, set up just over a year ago by the industry working alongside debt charities to raise standards. But membership is not mandatory and it's funded by...

industry. Well now, Labour MP Yvonne Fovarg, who chairs the all-party parliamentary group on debt and personal finance, told us that needs to change. It needs to be put on a statutory footing. It needs to be more widely advertised. and it needs to be completely independent of the bailiff industry. It's also not mandatory for bailiffs to join, and it should be, because all bailiffs should be regulated in the same way. They shouldn't be able to have these.

Cowboys operating outside of the system. But surely, Dan, that would require a change in the law. What's the government said to you? Well, the Ministry of Justice covers this area for England and Wales. The law in Scotland and Northern Ireland is different. It told me the vast majority of bailiffs treat people fairly, but it's committed to cracking down on those who don't.

whether the ECB requires statutory legislation by December. Thanks, Dan. Well, we're joined now by Gary Rycroft, Senior Partner at Solicitors Joseph A. Jones. Gary Rycroft, a rather frightening experience for Phil there. What's the first step you should take if you get a letter out of the blue, like Philip did, about the debt of a complete stranger?

Very frightening for Phil. I feel very sorry for him. If you receive a letter like that, you've got to bear in mind bailiffs are acting as enforcement agents for creditors. Now, the creditors might be an individual, it might be a business, it might be an arm of government. So the first thing to do is to complain to the...

creditor to explain to them what's going on you should also complain to the bailiff firm themselves let them know as soon as possible especially if they're threatening to call at your house

The bailiff have authority, as the letter said to Phil, through a warrant issued by the court. So complain to the court because if the court have got their paperwork wrong, that's why the warrant is wrong. So complain to the court. And of course there might be an ombudsman service available if the debt's about an energy bill.

or financial product, or indeed something to do with the local government, you can go to an ombudsman. But it's very fragmented, and so that's why I agree with Yvonne. We need a mandatory independent board. It's a lot of work, though, isn't it? I mean, Phil told us that he did a lot of work, and he felt he had to... prove his innocence, rather than Marston proving it was him.

I completely agree, Paul. And, of course, the usual rule in justice is that you're innocent until proved guilty. And here that burden of proof has been reversed. But I'm afraid the horrible fact of the matter is because there's been a mistake...

then you do have to prove your innocence and the practical way to do that, as Phil found, is for him to actually prove who was living at his house and who wasn't living there through something like his council tax bill. That's a bit difficult though, isn't it? Because the council tax bill would be much the same, even if this other person...

was a lodger in the house. Would the electoral register or something like that maybe help? Something like that will help as well, yes, but very frustrating and time-consuming. And in the majority of cases, we believe bailiffs or... enforcement agents, as they like to be called now, if they come and they do have their facts straight and you do get that knock on the door at half past five in the morning that Phil was afraid of, what are your rights?

Yeah, well, it's very important to understand that bailiffs or enforcement agents are the last resort when it comes to seeking payment of a judgment debt issued by the court. You know, on Moneybox, you are very used to actually explaining to people what their rights are if they are owed money. So it's very important that there is a right for debt to be enforced. But if they come knocking on your door, I would say in the first place, don't let them in.

time refuse them and actually say I understand there's a debt and I'm going to deal with it they shouldn't come through your door if you tell them you're going to deal with the debt because it is a last resort for them to have a right of entry and to seize goods so if you're going to be savvy about it turn them away the first time. And then, of course, you've got to deal with the debt. You've got to be true to your word.

Yes, indeed. And in Phil's case, if he'd done nothing and Dalis did call and he did let them in, could they have taken his stuff for someone else's debt? No, absolutely not. Dalis can't do that. They can only take goods.

that belong to the person who is named on the warrant. You've got to prove it, though, and that's what Phil was concerned about. How do I prove that television is mine? Indeed, yes. But that is the law, and actually you understanding that and explaining that to the enforcement agent should show them that you are savvy. about it yes and just in a word really Gary people might get a letter like Phil first thing

To do. You've got to deal with it. You've got to deal with it. And actually, if the debt is genuine, you have to deal with debt. So take advice from a charity like StepChange or something like that. But don't put your head in the sand. Don't ignore it, Gary Rycroft. Thanks very much. Now, if you have a car, did you, like Joe?

Buy it with finance from your car dealer. It's a finance agreement, yeah. Yeah, no, it works for me. I think it's a good way of being able to get something brand new, sort of like top of the range, but you're only paying monthly, so it's affordable.

And do you know what interest rate you're paying? Do you know what? I'm not too sure, no. I'm not sure what I'm paying on that. Did you negotiate that rate or that was the rate you were given and that's the rate you're paying? I think that was the rate I was given, yeah.

That was Joe speaking to our reporter Joe Krasner in Liverpool. And if he bought that car before February 2021, Joe could be one of perhaps millions of people who eventually might be entitled to compensation. Because before that date, some banks who were raised... the finance linked the commission paid to car dealers to the interest rate the dealer told the customer they had to pay. One major high street bank agreement seen by Moneybox shows that if the customer signed up to an APR of 5.9%

The dealer earned nothing. But if they signed up to 14.9%, the dealer earned £1,350. Every 10,000, the customer borrowed. Now, in 2021, the Financial Conduct Authority banned such deals. 18,000 people have already complained to the Financial Ombudsman about this Motor Finance Commission, many of them since January. And that was when, for the first time, the ombudsman upheld.

two complaints, and the next day the FCA announced a new review of historical Motor Finance Commission arrangements. Well, with me in the studio is Stuart Masson from the online publication The Car Expert. I mean, Stuart Masson, these were called... Discretionary Commission agreements. Lenders pay dealers more the higher the interest rate. Were they legal? Good morning, afternoon, Paul. Yes, they were legal. These had been running for...

decades in car finance and various other kinds of finance. So yes, they were legal. The FCA, as you said, in 2020 announced that they were going to be made illegal and that ban came into effect in 2021. Since then, there have been an enormous number of complaints. The Financial Ombudsman Service currently, I think, has about 18,000 complaints on its books. And as you said, in the last couple of months... upheld a couple of fairly

average examples of these sorts of agreements and found in favour of the customer and against the finance companies. And that's really opened a can of worms. Yes, indeed. But as we heard from Joe, I mean, he was probably fairly typical. He was ignorant about the rate. and how it was done. He just wanted his shiny new car, didn't he? Would people have been aware of what was happening? No, absolutely not because...

I mean, a lot of people don't read their finance contracts anyway. They're complicated. They're lengthy. They use a lot of jargon that most people aren't familiar with or don't necessarily understand. Well, even if you read the agreement, which most of us... probably don't. Yeah, and even if you read the agreement, it wouldn't tell you that there was a discretionary commission arrangement, that the dealer had the authority to manipulate...

the bank's interest rate. To get more commission. It is extraordinary. It was allowed for so long. Now, in 2021, as you said, the Financial Conduct Authority banned them. And then three years later, it launched this investigation in January this year, just after the... Ombudsman found in favour of those customers. What did it announce? What's it doing now?

What the FCA has announced is that it is pausing the complaints process. So at the time, the Ombudsman Service had received about 10,000 complaints and... with these two fairly typical examples being upheld that really Open the door to huge numbers of similar complaints coming through which would mean clogging up the ombudsman service huge numbers of complaints going to each of the finance companies So what the FCA has announced that is pausing the complaints process so anyone that was

to make a complaint right now it won't go anywhere so it's decided it's going to review the entire car finance industry in this in this matter and it's going to take until September. to properly review that and decide whether or not there needs to be an industry-wide redress for customers that had these types of agreements, or whether it thinks it's not an industry-wide problem and that it should be...

be handled through the ombudsman and individual complaints. Yes. Now, the Finance and Leasing Association, they speak for the... finance industry and this, told us these were discretionary interest rates and they could work the other way with people getting better deals to be more competitive. And Lloyds Bank said exactly the same to us about black horse finance, one of the ones that affected. Would dealers willingly earn...

less commission to give customers a better deal? Most of the time, that would... seem unlikely for a car dealer to willingly forego money, but it was one of the tools they had to help a customer get a deal to help sell a car. So they could play with the price of the car, they could play with the price of your trade-in, and they could play with the amount of interest you were paying on your finance.

Yes, and just briefly, listeners who took out a finance agreement before 28th January 2021 feel they might get compensation. What should they do? You need to speak to your finance company. So not the dealer where you bought the car. They're not going to care. So it's the finance company. Most of these companies now have pages on their website where you can... put in your details and it will be able to tell you whether or not you had one of these deals and therefore progress to a complaint.

Stuart Masson of a car expert, thanks. Now, if you still use postage stamps, it's worth buying some first and second class stamps now, because they go up on April 2nd. From that date, it will cost £1.35 for a stamp that might get your letter there tomorrow, and £0.85... for a stamp that definitely won't. Sandra Hardiel has the details. Sandra, another rise. The third in 12 months. Yes.

In April last year, the price of a first-class stamp rose to £1.10. Then in October, it went up to £1.25. And now, from the Tuesday after Easter, it'll cost another 10 pence per letter. £1.35 for first class stamps and £0.85 for second class. The regulator Ofcom says that 93% of first-class mail should arrive the next day, but in 2022-23, one in four first-class letters didn't.

It fined the Royal Mail £5.6 million. So why is the price going up when they're not hitting their targets? The Royal Mail told us the cost of delivering letters to every address in the UK six days a week is unsustainable. Last year, it made a loss of £419 million, and it wants to save money by cutting deliveries. But so far, Ofcom has not agreed. But if you buy stamps now marked first or second class, you can still use them after the price rise.

Yes, they're still valid, even if you buy them before the price goes up, saving you 10 pence per stamp. Thanks, Sandra. And it does work. Loyal Moneybox listener Pete Nadine wrote to me, I bought £400 worth of first and second class stamps in 2003 for 19 pence, wait for it, and 27 pence for a first class and still have... have plenty left after exchanging them for first and second class stamps as advised by Moneybox, the barcoded ones. He even sent me pictures. Thank you, Pete.

And a tweet from two people, Swamp Thing, said, I've just had to go to a sorting office to collect two weeks of post that wasn't delivered. I can't see the reason for stamps costing so much. And James said, is there any point in paying for first-class mail when they sit in Royal Delivery offices?

I'm pleased to say the price of the Moneybox podcast hasn't changed. It's still zero pence. And if you subscribe on BBC Sound, you know it will be delivered to your devices exclusively within two hours of the live programme, which you can catch at midday every Saturday. on BBC Radio 4. And you also get Moneybox Live with Felicity Hanna, delivered free.

You and the Chancellor drive our agenda. He makes speeches, of course, but you can email us, moneybox at bbc.co.uk. We do read them all. You might get on the show. In today's podcast, the reporter was Dan Whitworth, researchers Sandra Hardiel and Joe Krasner. studio manager Ben Houghton. Our editor was Sarah Rogers. I'm Paul Lewis and this was a BBC News Money and Work production for BBC Sounds. And now, From Wages to Sin. Forgive us listeners for we have sinned.

And we want to know why. I'm Becky Ripley. And I'm Sophie Ward. And we're here to tell you about our new podcast series. Seven Deadly Psychologies. Now available on Seriously from BBC Radio 4. So, ready? Born Ready, where we take a cold, hard look at the psychology behind each of the seven deadly sins. We shouldn't discard them. We should ask ourselves what they mean. It's this idea that if you give in to your lusts...

that you are animal-like. We have to let our minds have time to free will. Finding empathy is probably the best tool to manage anger. To hear the whole series, just search Seven Deadly Psychologies on BBC Sounds. Vivint lets you keep an eye on your kids from anywhere, so it's a smarter way to care. Because Vivint adjusts your thermostat when it knows you're out, it's a smarter way to save. When Vivint guards your packages from Prowlers, it's a smarter way to protect.

And when you can lock the doors and dim the lights for movie night with a single tap, well, that's a smarter way to live. To get the smarter home system that just gets you, go to Vivint.com or call 1-855-4-VIVINT. Live intelligently.